Short-Lived Relief

As expected, the farm loan waiver scam has hit the spotlight, with the Comptroller and Auditor General’s critical report being released in Parliament. Given the intense political grandstanding on display, many think this report (on the gaps in the implementation and monitoring of the Rs 52,275-crore scheme) has the potential to be a major political embarrassment for the UPA ahead of the 2014 election. Especially since finance minister P. Chidambaram’s waiver was a key factor in ensuring UPA’s re-election in 2009.

However, the report—around which Outlook had done a series of newsbreaks in February 2013—does not let the opposition-ruled states off the hook either. The CAG has focused on dubious dealings in several cooperative financial institutions, which by and large enjoy political patronage and lack transparency in operations. This all-round rot has pro­mpted an anguished lament from Dr M.S. Swaminathan, Rajya Sabha member who headed the Nati­onal Farmers’ Commission: “Conver­sion of good intentions into accomplishments has become difficult because of the prevailing greed revolution.”

The CAG report highlights the fact that irregularities have been noticed in over 20 per cent of the cases audited. According to the report, eligible farmers have been denied relief in 13.46 per cent cases; while in 8.5 per cent cases ineligible people have been found to have benefited. The Opposition, led by the BJP, has pegged the loss at Rs 10,000 crore. “It would be unrealistic to put such a number as it could well be much higher or even lower,” says a senior ministry source. The source points to the fact that the sample size is small, with only 90,576 accounts out of a total of 3.45 crore beneficiary accounts having been audited.

The report lists many instances from opposition-ruled states—for instance, of the 1,257 eligible farmers found to have been denied the waiver in nine states, as many as 1,147 (91.2 per cent) belonged to Madhya Pradesh; the sum involved is over Rs 3.2 crore. In Punjab, three bran­ches of the Primary Coop Agri­culture Development Bank were found not to have provided relief in 176 cases despite having claimed Rs 17.87 lakh. In Haryana, the Primary Coop Agri­cul­ture Rural Development Bank was found to have not just recovered the full loan amount from 69 farmers though they were eligible for 25 per cent relief but also claimed Rs 6.38 lakh as relief from nabard.

“The CAG report is just the tip of the iceberg. I am sure there are many other cases which have not been audited and where irregularities have occurred,” says Raju Shetti, MP and president of the Swabhimani Paksha. His sarcastic description: the deprived farmers may have most probably lacked political clout or were handicapped by the inability to pay bribes unlike the undeserving beneficiaries.

Although the CAG report goes on to mention the involvement of a private sector scheduled commercial bank, it’s not named. D.K. Mittal, former secretary, financial services, had told Outlook in an earlier interaction that in the case of mfis being found to be beneficiaries, only two private sector banks—ICICI Bank and HDFC Bank—were involved. Despite e-mail queries, the former dec­lined to comment while the latter told Outlook that the matter had been clarified with the regulator and no instances of any irregularities in the waivers had been found. s.

As for Chidambaram, he assured Parliament, “I would come back to the House and report what the extent of the error was and how they have been corrected.” According to sources, the FM is likely to make a statement next week. One wonders whether it will hold good news for debt-burdened eligible farmers who lost out.